Redshaw Corporation has provided the following data concerning its two products: The profitability index for product N43J is closest to:
A)0.87
B)0.40
C)$18.00 per ounce
D)$7.20 per ounce

Question

Redshaw Corporation has provided the following data concerning its two products:  The profitability index for product N43J is closest to:
A)0.87 
B)0.40 
C)$18.00 per ounce 
D)$7.20 per ounce

Quizplus · Accepted Answer

Profitability index for a volume trade-off decision = Unit contribution margin ÷ Amount of the constrained resource required by one unit = ($288.00 - $172.80)÷ 16 ounces = $115.20 ÷ 16 ounces = $7.20 per ounce

Redshaw Corporation Has Provided the Following Data Concerning Its Two